Posted on 01/15/2003 3:36:26 PM PST by Marianne
ALBANY - Tax avoidance by smokers has become so widespread that upward of 40 percent of all cigarettes consumed in the state are obtained through Indian smoke shops, the Internet and other places that don't charge state or local taxes, an industry group said Tuesday.
The rush by smokers to Indian retailers, out-of-state stores and Internet sites intent on bypassing the state's rising cigarette tax cost the government nearly $900 million in tax receipts last year, according to an industry-funded study by Fair Application of Cigarette Taxes, a group representing convenience shops, grocery stores, gas stations and others that sell cigarettes.
The long-simmering debate has intensified again as the industry groups seek to use the lost tax revenue numbers as leverage with government officials desperate to find cash to close a deficit estimated as high as $12 billion.
Native American representatives dismissed the study as a self-serving effort from an industry trying to take advantage of the state's budget deficit problems.
In a strange twist, Fair Application of Cigarette Taxes appeared Tuesday in Albany, allied with health care lobbyists with whom they had fiercely fought in past tax-increase battles. Both urged the state to restrict the sale of untaxed cigarettes.
"On this issue we have common ground," said Russell Sciandra, director of the Center for a Tobacco Free New York.
The health groups say tobacco consumption levels have fallen since the state last year pushed its cigarette taxes to the nation's second-highest - $1.50 per pack. However, they say the drop has not been nearly as much as it would have, had such easy ways to avoid taxes not been available to consumers.
"We want to see the full public impact of the increase in excise taxes," said Timothy Nichols, a lobbyist with the American Lung Association.
In the Buffalo area, non-Indian retailers say they have seen their revenues drop since last year's big cigarette tax increase as more and more of their customers head to Seneca smoke shops or the Internet.
The U.S. Supreme Court has said the state has a right to collect taxes on cigarette sales by Indians to non-Indians. But the Pataki administration, after once siding with non-Indian retailers and in the face of violent Indian protests, in 1997 backed off trying to collect the taxes from reservation sales.
Now, with the state facing a huge budget shortfall, industry officials believe they may have a new tactic to use in Albany to get officials to notice their plea.
The state "has a right to collect this tax to help solve the state's budget problem," said Dan Finkle, a Fulton County businessman and spokesman for Fair Application of Cigarette Taxes. His group is scheduled to hold a news conference today in Buffalo on the issue.
The group spent $17,000 on a study to look at uncollected taxes from cigarette sales. The group's consultant, using a variety of data, estimated up to $609 million in cigarette taxes went uncollected in 2001. By last year, that number had soared to nearly $895 million. Besides the state, local governments were money-losers since the nontaxed sales lowered what they would have otherwise collected in sales taxes.
aka Bootleggers.
What on earth did they expect us to do, in a free country?
And if they try to shut us out of the places we are using, there's going to be a real black market! One that little old grandparents can find their way to, with or without help from our children.
I wrote a paper on this topic once. Tobacco used to be a medium of exchange in colonial Virginia. Even preachers were paid in tobacco. In fact, the preachers of colonial Virginia once even when on strike because they were dissatisfied with the quality of tobacco their parishioners were paying them.
Maybe they just "collect" credit card numbers.
Good thing the central bank came along to put an end to all those whacky transactions denominating their economy.
Don't you realize that your tax avoidance strategy subsidizes terrorism? Just watch TV, those in-the-know explain how smoking supports terrorism, oh yeah they were smoking illegal pot, not illegal cigarettes, my bad, never mind.
A tax law evidently creates an entitlement so that noncollections constitute a "loss".
. . .to close a deficit estimated as high as $12 billion.
I hear several states enacting tax measures to close a huge deficit. No one seems to ask why such a deficit exists in the first place.
However, they say the drop has not been nearly as much as it would have, had such easy ways to avoid taxes not been available to consumers.
I'm blinded by the brilliance of that statement. Will they tell us water is wet and dirt is dirty now?
Come on, New York, tell us why you owe $12 billion and who you owe it to, and what security did you give for the debt that can be siezed on nonpayment.
I give up. Tell us.
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